How A Good White Collar Lawyer In Arizona Can Leverage "puffery"
The recent economic roller coaster face experienced by many corporations around the
world has resulted in an unprecedented numbers of people in need of a white collar lawyer in Arizona. As the director of the FBI confirmed last fall, 24 large financial institutions have been investigated for some type of alleged fraud. Whether or not these investigations will result in a filing of charges, it is clear that the current financial crisis will bring about a wave of violations and civil suits alleging violations of the Security Exchange Act of 1934 based on purported material misstatements about a public company's performance. These companies will soon become the clients of a white collar lawyer.
While these new cases may be bigger and have a higher profile than cases in the past, the legal issues are no different than those faced by any case involving a white collar lawyer. Most of the current cases center themselves around classic securities fraud. So while they may be bigger and more extensive, they involve the same basic issues as any other white collar crime.
A white collar lawyer in Arizona is likely to argue that the alleged statements were in fact not material, and therefore cannot form the basis of a legal liability. What counts as a material statement? Statements are considered material when there is a substantial likelihood that a reasonable shareholder would consider the matter relevant enough to affect his or her vote.
A white collar lawyer is also likely to argue that his or her client's statements were mere "puffery," or vague statements of opinion that are more like sales talk than legally binding material. Just because a stereo salesman talks up the latest gadgetry does not make him guilty of stereo fraud, for example.
In the context of civil securities fraud cases, defendants have increasingly used puffery statements successfully to obtain dismissals. These are sober times, however, and juries and judges are less likely to overlook statements that could be seen as having fooled people into making decisions that only made the crisis worse.
Recent court decisions raise questions as to how courts will interpret the extent to which puffery can be argued by a white collar lawyer. It is quite natural, especially in times of financial chaos, to look on the bright side. When times get most challenging is when we need to put our best foot forward, and that starts with appearances. When does optimism become a misstatement of fraud that can lead to being found guilty of a white collar crime?
To what extent do those who run a business risk in the statements they make giving financial hindsight? This is a recurring issue that will play itself out in the courts. One recent case involved wire fraud where a client had stated that certain funds provided an "awesome opportunity," and another that offered the statement that said, "I think this is a good opportunity." In hindsight, these opinions turned out not to be true. That doesn't make them fraud, however if the statements were made in good faith. A good white collar lawyer can make protective arguments that their client was only making asides or statements they thought to be true in good faith.
by: David Michael Cantor
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